A hefty price tag hinders Congress on year-end legislation

Extending payroll tax break would cost $120 billion.

By Robert Pear, New York Times

Published 7:11 pm, Saturday, December 10, 2011

WASHINGTON — The costs of last-minute items pending before Congress are formidable, and lawmakers say that is a major reason they have had so much difficulty reaching a year-end agreement on payroll taxes and other issues.

Politics and ideology play a big role in the debate, but the sheer cost of the items — which could easily top $350 billion, according to the Congressional Budget Office — is also a factor.

No agreement between the House and the Senate is in sight.

President Barack Obama and Senate Democratic leaders say Congress must not leave town for the holidays unless it extends unemployment benefits and prevents a tax increase for the middle class by extending a payroll tax break that is scheduled to expire Dec. 31.

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An employee's share of the payroll tax, now 4.2 percent of wages, is scheduled to rise to 6.2 percent in January, adding $1,000 to the taxes paid by a typical working family with income of $50,000.

Keeping the tax rate at its current level for another year would cost the government $120 billion, the budget office says.

Obama and congressional Democrats want to lower the payroll tax rate to 3.1 percent through 2012. Setting the rate at that level would cost at least $180 billion, the budget office says.

Many lawmakers also want to extend jobless benefits for the long-term unemployed, who will begin to lose assistance early next year unless Congress acts. The cost would range from $34 billion to $55 billion or more, depending on specifics of the legislation.